CBA rewards bosses of scandal-ridden financial planning division

Victims of the Commonwealth Bank’s financial planning scandal have slammed as ‘‘obscene’’ and ‘‘devastating’’ the multimillion-dollar pay packets pocketed by executives in charge of the troubled division.

Grahame Petersen and Annabel Spring received million-dollar pay rises and big cash bonuses despite a Senate inquiry that called for a royal commission after allegations of fraud, forgery and a management cover-up in the unit.

Mr Petersen, who ran the division between 2006 and 2011 when it employed rogue planners such as Don Nguyen, got more than $5.6 million - a pay rise of more than $1.1 million.

The executive who replaced Mr Petersen as head of financial advice, Ms Spring, also received a hefty pay rise, of $900,000, bringing her total package to almost $3 million.

Merilyn Swan, whose parents were victims of Mr Nguyen, said that ‘‘in light of what has been exposed in the past 12 months it is obscene that bonuses of this size have been paid’’.

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‘‘It is appalling when you think they wouldn’t hire a handwriting expert for $6000 that would have exposed forgery. It certainly puts it into perspective what their priorities are.’’

She said there was a disconnect between the salaries and people investing their life savings. ‘‘Some people lost $200,000 and it caused ruin but this sort of money to them is coffee money.’’

Jan Braund, who also fell victim to Mr Nguyen, said: ‘‘When they announced a record profit of $8.68 billion last week I thought that was obscene, but the bonuses they are paying themselves given what has gone on is even more devastating.’’

‘‘These are the people who are supposed to look after the little people who collectively made that bank wealthy, they are the ones reaping the rewards and it has taken this amount of time for them to even think of the little people.’’

After running the advice arm, Mr Petersen became head of business and private banking. He retired this month in the wake of the financial planning debacle with a final pay packet that also included almost $1.3 million in cash bonuses.

In December, online stockbroker CommSec, for which his CBA bio shows he was responsible, was slammed by the corporate regulator after failing to keep money belonging to clients separate from the bank’s own cash.

Under Ms Spring’s tenure at the helm of the financial advice business, a flawed compensation scheme for victims led to tension with the Australian Securities and Investments Commission.

As a result, ASIC slapped new licence conditions on two CBA advice businesses, Commonwealth Financial Planning and Financial Wisdom, that included putting compensation for customers on the agenda when the bank’s board met earlier this week.

Citing ‘‘intense public scrutiny’’ of the financial planning scandal, CBA director Jane Hemstritch said the remuneration committee she heads lopped $515,000 from the bonus chief executive Ian Narev would otherwise have received.

Ms Hemstritch said CBA acknowledged ‘‘that the quality of advice provided by some of our licensed advisers in past years has caused financial loss and distress for some of our customers’’.

Despite the move, Mr Narev received a cash bonus of $3 million, up more than $400,000 from the previous year. His total pay packet soared from about $6.8 million to about $8.1 million.

The pay packets of executives were also swelled by millions of dollars worth of CBA shares, the value of which has ballooned along with the bank’s profitability.

Greens Senator and former investment banker Peter Whish-Wilson said CBA shareholders should be ‘‘jumping up and down’’ over Mr Petersen’s pay packet.

‘‘I’m flabbergasted that they’ve given him a pay rise when we don’t know what shareholders will have to pay out yet for compensation for poor financial advice over the period when he was in charge,’’ Senator Whish-Wilson said.

He said the CBA and its executives ‘‘haven’t atoned for their sins yet’’.

‘‘There’s many customers who haven’t recovered funds, lost to dodgy financial advice and bad behaviour, and yet the bosses have given themselves a pay rise.

‘‘This sales-based culture that drives shareholder returns is responsible for these large pay packets and is also responsible for the behaviour that has caused customers to lose money.’’